By the numbers
Q3 net income: $760M
Up 14.6% year over year
Q3 operating EBITDA: $1.67B
Adjusted operating EBITDA growth was 11%, and margin was a “record high” of 30.5%.
- Results: During a Tuesday earnings call, CEO Jim Fish and other WM executives highlighted a combination of continued technology investments, pricing and improved frontline employee retention and truck deliveries as factors for a successful quarter. “We have a lot of momentum for a strong finish to the year, which will position us to deliver another year of outsized growth in 2025,” Fish said.
- Collection and disposal performance: Notable growth in the collection and disposal business helped drive increased revenue in Q3, said CFO Devina Rankin. Strong landfill volumes, specifically in the Midwest region where WM opened a rail-served operation last year, also drove growth, Fish said. Overall MSW volume was up 5.7%, though rolloff business remained “soft,” Rankin added. Core price was 6.5%.
- M&A progress: M&A could reach the $1 billion mark by the end of the year or early into 2025, Fish said, not including WM’s planned Stericycle acquisition. WM has invested $790 million on acquisitions so far in 2024, mainly for solid waste businesses, which contributed $108 million of revenue growth this year, Fish said. Rollover contributions could be about $150 million in 2025, representing about $35 million of EBITDA, Rankin added.
- Stericycle regulatory approval process: WM remains on track to complete its acquisition of Stericycle in Q4. It’s still awaiting regulatory approval in Canada, which Rankin characterized as “typical competition reviews in the Canada market” that she does not expect will delay closing. WM is also moving forward with integration planning “as expected” and plans to bring Stericycle employees on board during the quarter.
- Stericycle synergies update: WM had previously said it expects to realize about $125 million in annual cost synergies from the deal, but “we now are pretty convinced that is a conservative number,” Fish said. More insight into updated synergies estimates could come when WM gives its 2025 guidance, he said, but Fish says WM is “even more enthusiastic about the strategic side of Stericycle” than it was when the deal was announced earlier this year.
- RNG updates: WM has brought online three of its 20 planned renewable natural gas projects, including one that started up earlier this year. It expects four more projects to be commissioned by the end of the year. Those seven projects are expected to contribute about 6 million mmBtus of annual production in 2025, a year Fish said will be “pivotal” for contributions from renewable natural gas investments. WM also anticipates $145 million in investment tax credits in 2024 from such projects, Rankin said.
- Recycling investments: In Q3, WM completed two new recycling facility projects in New York and Florida, as well as six automation upgrades, as part of its ongoing recycling automation investment plan. The completed projects have added 1.5 million tons of annual recycling capacity across North America, executives said. Chief Sustainability Officer Tara Hemmer said such projects bring in an estimated 17% higher blended commodity price and save on labor costs per ton by an estimated 30%.
- Commodities price boost: Higher recycled commodity prices helped drive revenue in Q3, Rankin said, but the effects of the port strike late in Q3 could affect prices for the rest of the year. Blended average price for single stream recycled commodities in Q3 was about $101 per ton, up from about $58 per ton the same time last year. Hemmer added that the estimated blended price in Q4 will be closer to $85 a ton. WM expects the full-year pricing expectation will be about $90 per ton.
